Equity markets survived a brief bout of volatility, driven by concerns over AI and inflation, to end the month slightly higher in November.
The S&P 500 ticked up +0.3% for the month to bring the year-to-date gain on the blue-chip index to +17.8%.
Smaller company stocks rallied +1% on the month, with the Russell 2000 Index now up +13.5% for the year.
International stocks ended the month roughly flat, as the MSCI ACWI ex-US index has gained +28.5% with one month left in the year.
Within fixed income, bond markets were relatively quiet despite Fed Chair Jay Powell injecting a degree of uncertainty around the odds of another rate cut in December. The Bloomberg Aggregate Bond Index added another 0.6% in November for a healthy +7.5% gain so far in 2025.
Commodity prices continued to rally, with the Bloomberg Commodity Index adding another +3.2% this month (+16% YTD), led once again by surging gold prices.
Our proprietary Three Dials allocation framework was unchanged during the month of November, as we outline below:
- Market Sentiment and Momentum: (Positive)
Investors haven’t had much opportunity to buy the dip this year, with the S&P seeing its first 5% pullback in November since the April market correction.
But, the ferocity with which buyers stepped in suggests that the bullish appetite for stocks remains, and so our Momentum Dial stays Positive.
- Economic Fundamentals: (Negative ❌)
While preliminary data suggests that Black Friday shopping increased from last year, we see many indications of a burdened consumer focusing on bargain items as their outlook over future economic conditions continues to sour.
On balance, our Fundamental Dial remains in a Negative position.
- Valuation: (Negative ❌)
You don’t have to look far these days for warnings about stretched valuations within the AI space, with recent reports from the Bank of England and the Organization for Economic Cooperation and Development voicing concerns about the sustainability of the recent runup in equity prices. As such, our Valuation Dial remains Negative.
On balance, our composite positioning remains somewhat defensive, with one dial in a Positive position but two dials remaining Negative.
Sources: Morningstar
Disclaimer: Our intent in providing this material is purely for informational purposes, as of the date hereof, and may be subject to change without notice. This article does not intend to constitute accounting, legal, tax, or other professional advice. Visitors and readers should not act upon the content or information found here without first seeking appropriate advice from a trusted accountant, financial planner, lawyer or other professional.
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